Silicon Valley Insider gets Nearshore Religion

In my third installment of my on again, off again series of interviews of successful Latin American software entrepreneurs, I interview Mario Chaves, President and CEO of Avantica, a Costa Rican nearshore software development company.

Mario is a very interesting man. He is a veteran of the Silicon Valley tech boom from the 70s to the 90s, and he is also a nearshore outsourced software development pioneer.

In other words, he is a double pioneer, having been in the eye of the storm of some of the more revolutionary technical advances of software’s early days, and now “into the tornado” of the exploding nearshore phenomenon.

And now, the interview.

LatinITMarketing: Mario, tell me a little it about your beginnings in the software industry.

Mario Chaves: I was born and grew up in Costa Rica till I was 14-years old, and then moved to the U.S. where I went to high school in Las Vegas. I went to the University of California at Davis (Note from editor: I went there too). During my last year Hewlett-Packard flew me out to Colorado for an interview, and I went to work for them.

After HP I went to work for a small start-up company called Software Publishing Corporation in the early 80s to work on product development. Back in those days they were focused on word processing and spreadsheet applications.

While I was there I went to a graphics conference and was amazed at how dismal the quality of the graphics were during the presentations!

Remember, these were the days before PowerPoint.

Most of the presenters using overhead projectors and transparencies had poor graphics, except for one guy. I went up to him later and asked him how he did it, and he told me he had hundreds of thousands of dollars worth of equipment to help him put together his presentation.

After the conference I started thinking about how to come up with a better and more economical way for companies to put together beautiful graphics for business presentations, and I created the software product that later became Harvard Graphics.

In 1987 Harvard Graphics won PC Magazine’s World Class Award.

LatinITMarketing: Tell me more about how you came up with the idea for Harvard Graphics.

Mario Chaves: Harvard Graphics was the pre-cursor to PowerPoint, but back then it was an unheard of concept.

Harvard Graphics was the first application to create charts and graphics for transparancies for overhead presentations.

There were some other applications, such as CharterMaster and Freelance, but we were the first to create presentations with graphs and word charts for transparencies.

When I was doing research for the product, one of my colleagues at Software Publishing Corp knew Scott Cook‘s wife, (Scott Cook, Intuit‘s Founder), who suggested I speak to Scott because he was doing a lot of presentations for investors.

Back in those days, if you wanted to create a pie chart or a bar chart for a transparency, you had to use different colored transparencies, measure and trace the shapes, cut them out and paste them to your master transparency. We’d use an IBM typewriter with an Orator font using oversized letters for the text.

The only option was to spend more than $100,000 for a very sophisticated system. Money we didn’t have.

The other alternative was to do a “print screen” of the graphics, but the quality was too poor.

We could adjust the dot matrix printer to increase the quality, essentially making it print over the same line over and over. We could do the same with plotters.

But the Achilles’ heal of the plotter’s text were the available fonts. The fonts were crap.

We thought “how could we get high resolution fonts for the printer and the plotter?”

We decided to digitize our own font, so that the plotter could “fill in” the font instead of “printing” it like it normally did.

We finally came out with something that created good quality fonts for presentations on overhead projectors.

We focused on usability.

We were happy to be at the lower end of the capability/functionality continuum, but at the high end of the ease-of-use continuum.

LatinITMarketing: Usability seems to be a theme for you throughout your career. What did you do next? How does your career segue into your nearshore development activities?

Mario Chaves: Well Harvard Graphics was essentially replaced in the marketplace by PowerPoint and Microsoft Office. We were selling Harvard Graphics for $399, and of course PowerPoint was bundled into Microsoft Office for less than that!

In 1992 I went to work for Intuit where I created ExpensAble, a travel expense application for road warriors. This was initially a desktop product, and then it became a software-as-a-service (Saas) product.

The catch was, the expense reports were customizable, and each company we sold this to wanted their own customized version with their own graphics and design.

This was very labor intensive, and programming for this in the Silicon Valley was cost-prohibitive.

So I called my brother who was living in Costa Rica at the time, and we figured out we could do it at a fraction of the cost.

We realized there was plenty of talent in my home country, and the ability to quickly deliver this service to U.S. based companies.

We started it as a sideline business since we both had full-time jobs, and pretty quickly we were cranking out customized expense reports to companies such as Rubbermaid and Johnson Controls.

Intuit eventually spun-off ExpensAble to a group of investors. ExpensAble has been our customer ever since.

Then the 90s Internet boom happened, and technical talent in the Silicon Valley was very hard to come by.

At that time I was offering product development services to friends of mine in my network to have them outsource development to us.

LatinITMarketing: So what set you guys apart within Silicon Valley as outsourced software developers?

Mario Chaves: We starting putting a lot of attention on project management.

From my Intuit days I gained lots of experience with project managent, and projects not getting done.

Engineers always like to change things at the last minute, “let’s change this little thing here, or that little thing there.”

Successful software projects are a three-legged stool.

Quality of software

Project Management: make sure the damn thing gets out on time!

Minimize cost of development

This drives revenue, both for the client and for us.

LatinITMarketing: Outsourced development has always been seen as a low-cost solution. What you’re saying cost is not the main factor?

Mario Chaves: Correct!

If we do our jobs right, we help the customer make money, and we establish a long-term relationship with the customer.

LatinITMarketing: Tell us more about usability and how this affects your work.

Mario Chaves: For me, software product development is not about technology, it’s about the user experience, the user’s needs.

That’s what drove my quest to come up with a low-cost presentation software that ended up being Harvard Graphics. The only solution was a multi-hundred thousand dollar, hard-to-use application, and my solution was an easy-to-use application that became the pre-cursor to PowerPoint.

LatinITMarketing: Mario, what advice would you give to other Latin American nearshore software development companies or software product companies wanting to enter the U.S. market?

Mario Chaves: There are so many Latin American software companies that are cool companies and have cool products and services, but they under-estimate what it takes to make it in the U.S. market.

I knew a company that had a hell of a time getting their product into the market, taking a lot of time to make it, because the U.S. market was not ready for them.

They provided a business intelligence software, where at the high-end Cognos and Business Objects are their main competitors, and at the low-end there is not enough demand. The mid-market would seem to be their sweet spot, but it’s a hodge-podge of offerings.

They were very successful in their home country, selling to the largest corporations and government agencies, but it’s a lot harder in the U.S.

Some of them don’t know how hard it is to sell in the U.S.

You have to be here (the U.S.). You have to make a commitment to the market.

Other problems I see is that many Latin American companies have good ideas that are not a good fit culturally. This happens a lot with products, so a good way to avoid that is to offer services, like we do.

LatinITMarketing: What are some hot opportunities in the software market for Latin American software companies?

Mario Chaves: There’s a second tech revolution going on right now with mobile appications. I’m betting on computing using the iPhone, BlackBerry, Android and other smart phones.

Latin American software development companies need to train their people in mobile application development, because in a few years it will be as big as the web.

There are two business models they can go with, the direct model where they sell their services directly to application providers, or the indirect model where they work with U.S.-based consultants who already have established relationships with application providers.